AP FACT CHECK: Iowa governor’s tax cut boast is mostly true

By SCOTT STEWARTJune 4, 2018

FILE - In this May 25, 2017, file photo, Iowa Gov. Kim Reynolds speaks during a news conference at the Statehouse in Des Moines, Iowa. Reynolds signed into law Wednesday, May 30, 2018, state tax cuts of $2.8 billion over six years, touting the benefits for the middle class. Most changes in personal income tax rates go into effect in tax year 2019, including lower rates for all income brackets. (AP Photo/Charlie Neibergall, File)

DES MOINES, Iowa (AP) — Iowa Gov. Kim Reynolds signed into law this week state tax cuts of $2.8 billion over six years, touting the benefits for the middle class.

Most changes in personal income tax rates go into effect in tax year 2019, including lower rates for all income brackets. The tax savings would show up as reduced withholdings from paychecks in 2019 and larger refund checks issued in spring 2020. Additional tax cuts are planned in future years.

A look at Reynold’s statement during a bill signing event in Hiawatha on Wednesday and the more complex reality behind it.

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REYNOLDS: “Next year, virtually every Iowan will see their taxes go down.”

THE FACTS: The governor’s statement is mostly true, although there are wrinkles that make the situation a little more complex than the governor suggests.

All nine of Iowa’s income brackets will have lower tax rates under the new law.

There are about 1.4 million Iowa residents who file state income tax returns. Of these, just over three-fourths would pay less in taxes under the new law, according to an analysis by the state Department of Revenue.

Roughly another 18 percent of Iowa resident taxpayers, or about 265,000, earn less than $20,000 annually and either make too little income to owe taxes or receive enough tax credits to cover them. They won’t receive a tax cut under the new law but it doesn’t matter because they don’t pay state income taxes.

That leaves about 3.5 percent of Iowa resident taxpayers, or about 50,000, who would actually owe more taxes next year. That’s not an insignificant number but still small compared with the number of those who will benefit.